Euro Continues to Struggle in Forex Trading

The euro continues to struggling in forex trading on the currency market, with a number of concerns weighing. The 16-nation currency is still dealing with the debt problems in Southern Europe -- especially Greece. With the public protesting over austerity measures, and EU nations trying to figure out what they can do to keep the contagion from spreading, there just isn't a lot of confidence in Europe right now.

Also, it isn't helping that gold prices are lower right now. The euro often moves with gold prices. And with gold lower on Chinese comments earlier, there is a little more pressure on the euro against the U.S. dollar in forex trading.

It looks to be an interesting day ahead, with risk aversion setting in, and forex traders looking to fundamentals in the euro zone.

More Intervention from the Swiss National Bank in Forex Trading

The Swiss National Bank appears to be intervening -- albeit it on a very small level -- in forex trading again. The SNB has been intervening on occasion since last year, when it announced a policy meant to keep the franc lower against the euro in forex trading.

MarketWatch reports on the possibility that the SNB is intervening again:

Another round of rumored currency intervention by the Swiss National Bank Wednesday appeared to be a warning shot designed to chill traders looking to sell the euro versus the Swiss franc as monetary policymakers prepare to meet, analysts said. ...

"If it was an SNB intervention, it was probably one of the smallest ones we've seen ... it's really just sort of backing traders off (of buying the Swiss franc) ahead of tomorrow's meeting," said Peter Rosenstreich, chief market strategist at ACM in Geneva.

At any rate, the Swiss want their currency weak in relation to the euro in forex trading, since during times of recession and economic uncertainty it can be beneficial to have a weak currency.

Who Has Lost More Jobs Men or Women?

The U.S. labor market report was released this morning and the data was much better than everyone had anticipated. Following the warning from Larry Summers that the storms in the Northeast could have swelled unemployment rolls, investors were bracing for the worst. However disaster was averted and Larry Summers will probably not be forecasting payrolls again anytime soon having embarrassingly caused a stir in the financial markets (but then again Summers is never one to be embarrassed easily). As I wrote yesterday, Summers did not have the NFP report on hand when he gave the warning which was clearly the case as payrolls fell a mere 36k.

There has been alot of analysis published on the NFP number including including ours on FX360.com. One thing that I do want to point out is that the blizzards took away slightly more than a million jobs which means that next month’s report should reveal a big jump in job growth.

Instead I thought it would be interesting to look at where the levels of employment and unemployment are for men and women. This data, calculated from the Bureau of Labor Statistic’s information is based upon the seasonally adjustment numbers for men and women over the age of 20. There are more men than women in the labor force but we have two scales on our charts to make the comparison between the rate of change easier.

The U.S. recession began in December 2007 and the number of employed men have fallen by 6 percent while the number of employed women have fallen by 2 percent since then. The level of unemployment amongst men has risen by 123 percent while unemployment for women have risen by 85 percent.

Will We See Yuan Appreciation?

It appears that Chinese inflation is on the rise again, indicating that the country is seeing strong economic growth. Again. China's leaders are wary of seeing such rapid growth, and are expected to clamp down, possibly even revaluing the yuan against the U.S. dollar.

However, the moves the Chinese are likely to make probably won't be that large. China recognizes its place as the current leader of global economic recovery, and is aware that limiting its growth too much will also limit the speed of global economic recovery.

GFT's Boris Schlossberg speculates in FX360 on what could be next for China:

The cost of such a shift however, has been a marked rise in inflation and many analysts are now fearful that the Chinese authorities will begin to clamp down on monetary growth by either raising rates or revaluing the yuan. However we believe that any tightening moves will be gradual at best and will be undertaken only after the Chinese are convinced that US economy is beginning to fully participate in the global recovery.

China may not have too long to wait for the U.S. to get a little more active in the global economic growth scene; there is speculation that things are improving enough that the U.S. will raise interest rates in the second half of 2010.